explain both in words and diagrammatically how the following government policy affect the economy’s saving and investment. Policy 1: Suppose the government passed a tax reform giving an investment tax credit to any firm building a new factory or buying a new piece of equipment.
Q: Last year real GDP in the Slothland was 345 billion and the population was 6.0 million. The year…
A: Real GDP is the GDP calculated on the base year prices. It is adjusted for inflation.The value of…
Q: Question The table below shows the index numbers for the cost of a basket of goods and services in…
A: Inflation refers to the increase in the price level of goods and services in a country over a period…
Q: Which of the following statements is not correct? Multiple Choice An increase in a nation's…
A: The Production Possibility Curve (PPC), also known as the Production Possibility Frontier (PPF), is…
Q: Suppose a monopolist's inverse demand curve is given by p(y) = 100 - 2y where p is price and y is…
A: Marginal Cost measures the change in total cost resulting from producing one more unit, while…
Q: 2. A tabular approach to Keynesian equilibrium The following table shows some information on a…
A: Aggregate expenditure is the present value of the finished goods and services. The equilibrium point…
Q: g) Later in the pandemic, inflation began soaring while unemployment started declining. The Federal…
A: The Federal Reserve or "the Fed" is the US central bank. It performs the duty of steering the…
Q: Incentives such as tax breaks for fuel-efficient cars or the use of social stigma to discourage…
A: Tax breaks refer to reduction of tax rate for individuals or firms which reduces tax liability for…
Q: The next 3 questions refer to the following: Labour Output 0 0 of 2 10 4 stion 26 6 46 8 65 10 72 12…
A: Total product is the total output produced by a firm using the factors of production. The average…
Q: ExxonMobil runs two oil refinery plants, one in Indonesia and the other in Malaysia. The total cost…
A: Answered belowIndonesia=1, Malaysia=4. -40.Explanation:Step 1:To find the optimal production levels…
Q: 1. Determinants of the price elasticity of demand Consider the following list containing several…
A: Elasticity is defined as the responsiveness to change in one variable. When changes in price will…
Q: Price 2017 (Base year) Production 50,000 The table below is extracted from Goodland Republic Bureau…
A: Macroeconomics examines the working, composition, and dynamics of an economy. To comprehend and…
Q: The following diagram presents a circular-flow model of a simple economy. The outer set of arrows…
A: Households earn income when firms purchase factor services in factor market.Explanation:Approach to…
Q: 4. Do you agree with the statement that “the best strategy is to know what you should not do”? Try…
A: In navigating the complexities of life, business, and decision-making, the age-old adage "know what…
Q: ASB is considering leasing a new machine. The lease calls for 9 payments of $1,022 per year with the…
A: Lease is a legal document that includes conditions under which particular property is to be used and…
Q: Fill in the blanks. A B C D E Pencils 600 530 430 250 0 Pens 0 100 200 300 400 As Catalonia moves…
A: The production possibility curve shows the trade-off associated with allocating the resources…
Q: 3 short term, medium term and and long term outcomes of a social enterprise dedicated to providing…
A: The objective of the question is to identify and explain the potential outcomes of a social…
Q: Imagine a very talented young person who has just graduated from high school and has been offered a…
A: Genesis of this challenge faces Derek a highly gifted student fresh out of high school looking to…
Q: The table given below shows the average total cost of production of a firm at different levels of…
A: Marginal cost refers to the change in the total cost when one more unit of output has been produced.…
Q: If you can't see the graph below: Shows the demand, private cost, and social cost curves. Social…
A: An externality is a cost or benefit that affects a party who did not choose to incur that cost or…
Q: (a) Assuming that each fishery chooses fi ∈ (0, F), to maximize its payoff function, derive the…
A: Given,
Q: Suppose there are two goods, x₁ and x2, with unit prices p₁ and p2. Consider a consumer with wealth…
A: A utility function is a mathematical expression, which is used in microeconomics and decision-making…
Q: Refer to VWQ7 Q8. The picture below shows 4 short-run average total cost curves (SRATC), one for…
A: Short run average cost is the total cost of production of a single unit of goods. It is affected by…
Q: The following graph shows the same domestic demand and supply curves for soybeans in Venezuela.…
A: International trade theories are significant in researching international economics because they…
Q: Consider an increase in the supply of labor due to immigration, and use the long-run model. Class…
A: The Rybczynski Theorem is an economic principle that describes the relationship between the…
Q: The following table shows economic data for two countries. Currency used Currency exchange to U.S. $…
A: Gross domestic product (GDP) measures the money value of all final goods and services produced in an…
Q: 1. With the aid of a diagram, explain the income and substitution effects of a price change 2. With…
A: “Since you have asked multiple question, we will solve the first question for you. If you want any…
Q: Use the graph depicting a typical consumption function to answer the questions that follow. a.…
A: Autonomous expenditure refers to the aggregate expenditure of the company that does not get impacted…
Q: 43.80 37.60 26.75 a 22.50 b 18.60 (Marginal Social Costs) (Marginal Private Costs) Marginal Social…
A: A free market does not experience any government intervention. All the resources are owned by…
Q: Under the world trade rules under the World Trade Organisation (WTO) regime National Treatment is…
A: The objective of the question is to discuss the advantages and disadvantages of National Treatment…
Q: Assume a perfectly competitive market with MWTP(Q)=59–Q and MC(Q)=17+Q. What is the change is…
A: Change in Consumer Surplus: Change in CS = CS new - CS original = 34 - 42…
Q: Choose c₁ and c₁₂ to maximize U(c₁, c²) = ln ((c²)ª³ (c²)¹¯ª³) for j = 1,2 subject to: pie² + e² -…
A: Given,Maximization problem,Sub toAnd,
Q: monotonicity
A: Monotonicity: Monotonicity essentially captures the concept that "more is higher." In the context of…
Q: Which of the following is(are) good example(s) for explaining the economic concept of scarcity? (We…
A: The concept of scarcity serves as a foundational principle shaping decision-making processes and…
Q: A firm's profit function is (q) = R(q)-C(q)=100q- (190+40q+10q²). What is the positive output level…
A: A firm maximizes profit by producing output at a level where the Marginal Revenue (MR) is equal to…
Q: The following information can be used to answer Questions #10-11. Assume that 2 individuals, College…
A: The problem at hand is a sequential game involving two players: a college student and a teacher. The…
Q: X- Unplanned Inventory Real GDP C I G M AE Investment Direction of Real GDP and Employment $500 $300…
A: Aggregate expenditure (AE) is the sum of consumption (C), investment (I), government spending (G),…
Q: Craig and Javad run a paper company. Each week they need to produce 1,000 reams of paper to ship to…
A: Total cost refers to the total expenditure a business incurs to produce a specific quantity of goods…
Q: The graph shows the demand for money curve. Draw the supply of money curve if the equilibrium…
A: In an economy the money market equilibrium arises at the rate of interest at which the quantity of…
Q: Inflation rate (%) The country of Freeland has an aggregate demand curve determined by the equation…
A: In this question we are given the AD curve of freeland as m+v= 6%, and its potential growth rate is…
Q: Refer to Table 13.1. If a monopoly faces the demand schedule given in the table, what is its…
A: Monopoly:Monopoly is a marketplace where there's one dealer and lots of customers. Seller sells the…
Q: Consider two identical countries, a and b, in our standard overlapping generations model. In each…
A: The objective of the question is to understand the value of currency and consumption in two…
Q: With a comparative negligence rule (where responsibility for damages is split between the injurer…
A: False. The statement is incorrect since, under a comparative negligence rule, both the victim and…
Q: If the price is P, the firm in a perfectly competitive market is making a profit when producing the…
A: Under a perfectly competitive market, firms are price takers and can only earn only normal profits…
Q: P* Pw Pdump P S In the graph above, Pw=29, Pdump=17, Q1=6, Q2=9, Q3=13, Q4=20, Q5=22. Germans are…
A: Pw = 29,PDump = 17Q1 = 6Q2 = 9Q3 = 13Q4 = 20Q5 = 22
Q: In this question, we assume Canada is a closed economy and is in its long-run equilibrium.…
A: The loanable (L) fund market shows the relationship between the demand (D) and supply (S) of…
Q: At a large round table sit n ≥ 2 players, each holding 3 cards: one white, one black, and one red.…
A: A symmetric Nash equilibrium is a strategy that is optimal for every player, assuming they all…
Q: Suppose the demand for a product is given by D(p) = -2p+ 167. A) Calculate the elasticity of demand…
A: Price elasticity of demand shows the responsiveness of a percentage change in price to a percentage…
Q: Government subsidizes corn farming by offering low interest loans and grants to farmers. Which graph…
A: Demand refers to the quantity of a good or service that consumers are willing and able to purchase…
Q: MARR = 8%. Your consultancy business signs on with a new client. The client pays you $5000 up front…
A: b) 13%.Explanation:To solve this problem, we need to calculate the internal rate of return (IRR)…
Q: Policy Decisions Suppose a person who is developing a card game crowdfunds $15,000 and holds this as…
A: The total monetary aggregate within an economy defines the money supply, while the money multiplier…
explain both in words and diagrammatically how the following government policy affect the economy’s saving and investment. Policy 1: Suppose the government passed a tax reform giving an investment tax credit to any firm building a new factory or buying a new piece of equipment.
Step by step
Solved in 1 steps with 1 images
- Give written answer with explanation and conclusion A government policy that would reduce the saving rate is ? a) giving tax breaks to increase the real return that savers receive b) eliminating the social security system c) increasing the government budget surplus by cutting government spending d) switching the tax system to tax consumption instead of incomeEconomists often argue that a large increase in government purchases – such as for the military – will crowd out private-sector spending. Use the investment-saving diagram to defend or to refute their premise.Scenario 3: Initially, the government's budget is balanced; then the government significantly increases spending on national defense without changing taxes. This change in spending causes the government to run a budget which national saving. Shift the appropriate curve on the graph to reflect this change. This causes the interest rate to the level of investment spending.
- Problem Set 4: Saving and Investment Economists in Fantasialand, a closed economy, have collected the following information about the economy for a particular year: Y = 9000; C = 6000; T = 1500; G = 1700. The economists also estimate that the investment function is: I = 3300 - 100r, where r is the country’s real interest rate, expressed as a percentage (i.e. r = 1 means interest rate is one percent). Calculate private saving, public saving, national saving, investment, and the equilibrium real interest rate.Show on a graph of the market for saving and investment the effect of the following. (The graph is a basic savings and investment graph). In an effort to improve fiscal conditions, policymakers raise taxes. This results in lower disposable income. Real interest rate (percent per year) 10. 8 6 4 2 SLF 0 1.2 1.4 1.6 DLF 2.0 2.2 1.8 Loanable funds (trillions of 2009 dollars) The savings function [Select] The investment function [Select] The real interest rate [Select] The level of savings and investment [Select]Consider an economy in which GDP is $30 billion. Tax revenue is $7 billion, consumption is $15 billion, and the government has a budget surplus of $2 billion. Show your work in each of the following questions.(c) What is national saving?(d) What is the level of investment?
- Classify each of the following based on the macroeconomic definitions of saving and investment. Saving Investment Crystal borrows money to build a new lab for her engineering firm. Hilary purchases stock in Pherk, a pharmaceutical company. Edison takes out a mortgage for a new home in Detroit. Brian purchases a corporate bond issued by a car company.________ Is that type of investment which is not affected by change in the level of output or incomeScenario 2: An investment tax credit effectively lowers the tax bill of any firm that purchases new capital in the relevant time period. Suppose the government repeals a previously existing investment tax credit. Shift the appropriate curve on the graph to reflect this change. The repeal of the previously existing tax credit causes the interest rate to _____ and the level of saving to _______
- Explain how changes in interest rates and rates of return on various investment options will affect the amount of money that businesses are willing to invest to increase output.Scenario 1: Suppose savers either buy bonds or make deposits in savings accounts at banks. Initially, the interest income earned on bonds or deposits is taxed at a rate of 20%. Now suppose there is a decrease in the tax rate on interest income, from 20% to 15%. Shift the appropriate curve on the graph to reflect this change. This change in the tax treatment of saving causes the equilibrium interest rate in the market for loanable funds to and the level of investment spending toExplain what happens to consumption, investment, and the interest rate when the government increases taxes. Show graphically the effect of increased taxes when saving is not dependent on interest rate.